Report: 40 percent of mobile ad clicks are fraud or accidents

Wonder why mobile monetization is still lagging as Kleiner Perkins partner Mary Meeker helpfully pointed out earlier this year? Well, one reason may be that many of the clicks on mobile ads are useless, the product of an increasing amount of fraud as well as a lot of inadvertent actions, said Trademob, a German mobile app marketing platform.

The company, which is in the midst of opening offices in San Francisco and New York, shared some new research with GigaOM, finding that 40 percent of clicks are essentially worthless, creating a conversion rate to install an app from an app store of less than 0.1 percent. Trademob found that 22 percent of clicks are accidental, while 18 percent are fraudulent. That could be one thing holding back mobile advertising as some advertisers question how effective their spend is on mobile.

Trademob — which aggregates more than 100 mobile ad networks and offers post-download conversion tracking to measure advertising efficiency — studied 6 million clicks around the world over six weeks earlier this summer. Click fraud appears to be a growing issue, repeating some of the problems that online advertisers had to deal with, Alexander Franke, COO of Trademob told me in an phone interview. He said mobile click fraud, which represented about 10 percent of clicks at the start of the year, falls into two main categories: server side and botnets/client side.

Franke said 8 percent of clicks are created by an app publisher who uses a server to register false clicks. A more sophisticated problem is when someone deploys botnets on a number of hijacked devices to manipulate mobile click data. And in some cases, fraudsters hide one banner ad behind another getting credit for both clicks. These two methods account for 10 percent of useless clicks, said Franke.

Trademob uses its tracking software to analyze the header data and IP addresses from clicks to identify suspicious clusters of activity. That can identify server-side fraud when the clicks come from the same IP addresses. For more sophisticated fraud, Trademob can identify when fraudsters generate clicks that don’t match the original campaign targeting settings. For example, Trademob will notice when a mobile ad campaign targeting iPhone users in western Europe, suddenly sees a lot of clicks from hijacked Android phones in India. Trademob puts these publishers on a blacklist and won’t advertise on them.

Accidental clicks are actually a bigger problem than fraud, but the rate of accidental clicks appears to be falling. Pontiflex ran its own survey with Harris Interactive last year and found that 47 percent of app users said they were more apt to click a mobile ad by mistake than on purpose. It’s not a straight comparison but Franke believes that accidental clicks are going down, in part due to larger screen devices which lower the potential for mis-navigation.

But it’s not just fat fingers. Many shady publishers intentionally place big banner ads next to small buttons to induce accidental clicks, said Franke. Using its tracking technology, Trademob is able to identify the persistant bad publishers who yield extremely low conversions after the click and add them to its blacklist.

These numbers are all generated by Trademob, who stands to gain by the awareness of useless mobile clicks. The company, which was founded in 2010 with funding from German VCs Tengelmann Ventures and High Tech Gründerfonds, has made its tracking tools one of its major selling points to customers. But Franke said Trademob has the best data around mobile clicks because of its sophisticated post-click analytics.

The figures, if true, help explain some of the lingering challenges for advertising. With mobile usage exploding, there’s a growing opportunity for ethically questionable people to recreate click fraud methods on mobile, where defensive measures are less mature. This may add to the concerns of advertisers, who are still figuring out how much they want to spend on mobile. That can ultimately hurt legitimate mobile publishers and developers who are leaning on ad support to pay the bills.